Day trading guide: Bank Nifty needs to break above 30,000 to attract bullish momentum

Amit Trivedi, YES Securities

It was a volatile Wednesday as inability to surpass prior week’s high (i.e. 13,146) triggered mild profit taking during the day. The Nifty opened above 13,100, but soon entered the negative territory, erasing most of Tuesday’s gain as it made a low of 12,984. On sustenance above 13,000, Nifty recouped the intraday losses to settle flat near 13,114. Since the past few weeks, the daily RSI has been forming descending tops and bottoms, suggesting lack of momentum on the upside; while the appearance of multiple peaks near the 13,130-13,150 zone indicates that positive follow-up action above 13,150 is essential to regain momentum on the upside.

Bank Nifty, which was under-performing since the past couple of days lost 2% during the day. Appearance of bearish candle at the current juncture suggests an immediate hurdle near 30,000 and decisive breakthrough above 30,000 is required to attract bullish momentum.

Nifty breadth was mildly positive, while sectoral indices trend turned mixed.

Equity recommendation

Buy Godrej CP near Rs 715-717

  • Stop loss: Rs 690
  • Target: Rs 770

Prior month’s decline took support near 50-week EMA and since then it is gradually trending higher. This week, the stock reclaimed levels of Rs 700 and is on a verge to break above the prior week’s high. Positive follow-up through is likely to attract bullish momentum.

Buy Karnataka Bank near Rs 49

  • Stop loss: Rs 46.50
  • Target: Rs 54.50

Given the sustained move above short-term averages and momentum indicators confirming momentum on upside, the stock is likely to surpass previous peak near Rs 50. Shifting range, higher levels of Rs 47 could turn out as the immediate floor.

(Amit Trivedi is CMT, Technical Analyst – Institutional Equities, YES Securities. Views are his own.)

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